So what happens now? “It’s always a matter of time,” Gurley says. “Having been through that, we’ve always said that good judgment comes from experience, and comes from bad judgment,” he adds.
“We did over-expand in 1999 to 2001,” he says, pointing out that Benchmark had a $1 billion fund at the time that it deployed for six or seven years. But Gurley was at Benchmark when the firm lost focus during the Dot Com Boom. “I mean, for the past five years, everyone told us we were crazy: Why aren’t you raising a billion-dollar fund? We certainly could have and then our management fees would have been five times as big,” Gurley says. As venture capital firms offered huge checks to get into the most promising startups, valuations soared, the IPO market boomed, returns were fabulous, and endowments, sovereign wealth funds, pensions, and foundations were clamoring for exposure. In the last few years, even some brand-new funds, such as Katie Haun’s crypto firm, managed to raise more than $1 billion for their very first fund. Its tenth fund (the first that Gurley isn’t part of since he joined the firm), is $420 million, dwarfed by the likes of Andreessen Horowitz, Kleiner Perkins, Khosla Ventures, or Sequoia Capital. It’s always a matter of time.”īenchmark is well-known for keeping its funds small. And so, during this time, you ended up with just a flood of new entrants…They amass all this stuff, and eventually just supply and demand are going to lead to that being a wreck. “They have very low barriers to entry and actually high barriers to exit, using the old Michael Porter stuff.
“I became convinced that the industry is structurally flawed and is always going to boom and bust,” Gurley tells me. He also has more than two decades of experience, with a front-row seat to how this mess might end, and how too much capital can lead to founders losing some discipline.
#Get high score bubble explode skin
Gurley is not making new investments these days, as he stepped back from Benchmark’s tenth fund a few years ago, but he still sits on 10 boards, attends Benchmark meetings, and has skin in the game. (You can read all about that here.)īut I couldn’t help but ask Gurley, who was outspoken in predicting that the tech bubble would burst for nearly a decade, how this private market crash would ultimately shake out. And we talked about a host of other things, too: Which music venues he is frequenting, how he was influenced by Steve Martin’s book Born Standing Up, Uber, A.I., and his new COVID hobby-guitar. But when I found out, he agreed to tell me why he and his wife ended up in Texas. After all, I hadn’t even realized he had sold his home in San Francisco and moved here about a year and a half ago. I hadn’t been planning to interview Gurley while I was in Austin. The two of us talked over a cup of coffee last week.
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